(Updates prices, adds comment)
By Marius Zaharia
LONDON, Dec 14 (Reuters) - Euro zone bond yields rose on Monday, as investors ignored political shifts in France and Spain and lightened positions at the start of a week that may see the first Federal Reserve rate increase in nearly a decade.
French elections on Sunday and Spanish elections scheduled for Dec. 20 had no discernible effect on bond markets, a sign that investors are more preoccupied with central bank moves than politics.
The European Central Bank's enhanced stimulus programme limits investors' desire to single out a sovereign where political risks are growing. This year's experience in Greece, where Syriza came to power on an anti-bailout platform, only to agree on tougher-than-expected terms to stay in the euro, has also given investors confidence in Europe's status quo.
Tactical voting meant Marine Le Pen's far-right National Front (NF) did not win in any region, despite winning more votes than any other party nationally in last week's first round. But the polls were no real victory for the mainstream Conservatives and Socialists either.
"The outcome in France, for those fearing the extreme right wing, could have been much worse," said Elwin de Groot, senior market economist at Rabobank. "But the market is busy with other stuff which may be more acute, such as the upcoming Fed hike."
In Spain, surveys published on Monday suggested the conservative PP would top next weekend's poll, with the main opposition Socialists (PSOE) and two newcomers, liberal Ciudadanos and left-wing Podemos, close behind.
The four-party race raises worries about political stability in a country that has been praised by Brussels for undertaking painful fiscal reforms, which have helped it onto a path of economic recovery that has surpassed the euro zone average.
The fragmented vote is unusual for Spain, where the PP and the PSOE have alternated in power. As in France, the economic crisis and high unemployment left many seeking alternatives to the usual ruling parties.
German 10-year Bund yields, the benchmark for euro zone borrowing costs, rose 3 basis points to 0.57 percent, briefly falling as oil prices fell to new lows.
French yields were up 5 bps at 0.92 percent, while Spanish yields hit a one-week high at 1.72 percent.
"NO DANGER"
Sunrise Brokers analyst Gianluca Ziglio said Greece's example showed any new government in a euro zone country, regardless of political colour, would still need to find ways to comply with requirements from Brussels and Berlin. The alternative -- in Athens' case, crashing out of the euro -- would be less desirable.